Right wing “gold bugs” take note. Maybe Glenn Beck is wrong. The New York Timesreports today that gold bug theory and gold reality have been diverging of late:

The price of the metal has been undergoing extraordinary reversal from a decade-long rally. Since reaching a high of $1,888 an ounce in August 2011, gold has been on a downward slope. The decline picked up pace on Friday, when gold fell 4 percent, officially taking gold into a bear market, which is defined as a 20 percent drop from its recent high.

The damage grew much worse on Monday, when the price of an ounce of gold dropped 9.35 percent, or $140.40, to $1,360.60 for the April contract — the sharpest such one-day decline since February 1983. […]

The shift in gold’s fortunes presents a moment of reckoning for many so-called gold bugs, who had expected their financial lodestar to continue moving up in response to the Federal Reserve’s effort to stimulate the economy through bond-buying programs.

The assumption among gold bugs was that the flood of new money would cause inflation, making hard assets like gold more attractive. So far, though, there have been few signs of inflation taking root even as central banks in Japan and Europe have begun their own aggressive bond-buying programs.

Oops! Theory is not matching reality. A question for gold believers: hold the course?